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CLOSING WRAP-UP, Mar. 31


By Jody Osborne, Optionetics.com
3/31/2005 3:30 PM EST


Late rally fails, leaving stocks lower on the session and for the first quarter of 2005. The Dow ($INDU) gave up 37.76 points Thursday to close the session at 10,503.17. This left the Dow off 2.59 percent for the quarter. The S&P 500 ($SPX) lost 0.82 points Thursday, but also fell 2.59 percent for the quarter to 1,180.59. The Nasdaq ($COMPQ) declined 6.44 points, moving back below 2K on the session. For the quarter, the Naz saw a large 8.10 percent decline.

Volume was moderate on the session with the NYSE trading 1.65 billion shares and the Naz turning over 1.75 billion shares. Market breadth was mixed with the Big Board seeing winners outpace losers by a 19-to-13 margin. However, the Naz saw decliners slightly outpace advancers.

Oil prices created problems for stocks Thursday with the May contract rising $1.41 a barrel to $55.40. At one point, prices moved above $56 a barrel. Gasoline prices also rose, adding nearly six cents on the session to $1.6549. Unfortunately, this news trumped positive news on the inflation front.

The personal income report carried a specific component that the Fed watches closely and this is the personal consumption expenditure index. The core PCE rose just 0.2 percent in February, putting the 12-month growth at 1.6 percent. Though there are signs that inflation pressures are building, this data shows that the Fed is not likely to accelerate their rate hikes.

Jobless claims rose unexpected last week, but the employment component in the Chicago PMI saw a sharp rise. However, wage pressures remain contained and this is another key part of gauging inflation. Friday’s session will see the release of more key data, including the employment report.

Shares of Elan (ELN) were not only the most traded shares on among optionable stocks, but also experienced the largest loss. This biotech firm saw its shares lose more than 50 percent of their value. ELN got bad news today when its multiple sclerosis drug Tysabri was linked to another death in Phase III trials. ELN was working with Biogen (BIIB) on the drug, thus BIIB shares fell 10 percent.

Thursday’s declines didn’t totally erase Wednesday’s gains, but it was enough to push the Naz back below 2K. The bulls and bears are battling for this level and possible Friday’s session will be the deciding factor in the near term.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site